First, the bad news:
If you’re among the millions who took out an adjustable-rate mortgage in the past few years, your monthly payment is likely to jump on the next adjustment date – by 20 percent, 30 percent, even 40 percent! This has already caused foreclosure rates to be up 18.7% over last year. Blame the Federal Reserve for driving up short-term interest rates. . |
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ARMS have been hot for the past five years because their low payments allowed homeowners to borrow more as home price rose. Now it’s time to pay the piper.
When the typical ARM adjusts, it does so by adding a “margin” – often 2.75 percentage points – to an underlying index such as the one-year U.S. Treasury Bill or LIBOR.
In the last 18 months the Federal Reserve has caused the one year T-Bill to increase from 1.26 percent to 4.37 percent.
What does this mean to you? Consider this example. If you obtained a 5 year ARM in 2001 for $200,000 at a start rate of 3.625%, your P&I payment would be $912.10/mo. When the loan adjusts this year, the rate will go up to 7.12% to a payment of $1,282.42 – an increase of 40.6%! What’s worse is that it can continue to increase next year to $1,462.79. –an increase of over 60% from your current payment!
BUT, there is good news, too: Long term interest rates have defied the Fed and remain low. You can save yourself from this payment shock by converting your ARM to the security of a FIXED rate mortgage while fixed rates are still below 6%. This can be done with NO cash out of pocket!
At First Nations Home Mortgage, Inc. the process is simple.
Call us at 800-794-9694 or click here to complete our short application and your loan could be approved in 24 hours.
Even if your ARM is not due to adjust this year, don’t miss this opportunity to lock in a fixed rate house payment you can afford well into the future. This may be your last chance before these record low rates go up. Fixed rates may not be this low again in your lifetime! |